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"Australia's future gas supplies": challenge issued to Australia's political parties.



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Level 3 24 Marcus Clarke Street CANBERRA ACT 2600 - GPO Box 2201 CANBERRA ACT 2601 Tel: (02) 6247 0960 Fax: (02) 6247 0548 Email: appea@appea.com.au

Level 1 190 St Georges’ Terrace PERTH WA 6000 - PO Box 7039 Cloisters Square PERTH WA 6850 Tel: (08) 9321 9775 Fax: (08) 9321 9778 Email: perth@appea.com.au

www.appea.com.au ABN 44 000 292 713

FOR IMMEDIATE RELEASE Embargoed for release after Midday (Eastern Summer Time) Thursday 26th February 2004

“AUSTRALIA’S FUTURE GAS SUPPLIES” - CHALLENGE

ISSUED TO AUSTRALIA’S POLITICAL PARTIES

Australia's major political parties at all levels of government have been put on notice by some of Australia’s and the world's leading oil and gas companies - work together to ensure natural gas contributes to the security and sustainability of the nation's energy supplies or sit and watch the community robbed of a “pot of gold”.

The warning came today from the Australian Petroleum Production and Exploration Association (APPEA) during the national launch of its industry-first discussion paper, “NatGas - Generating Economic and Social Wealth for the Nation”.

“NatGas - which outlines the view of APPEA and its members - is the most comprehensive natural gas supply strategy ever released in Australia,” APPEA’s Executive Director, Mr Barry Jones, said today.

“It represents the first time anyone has produced a comprehensive whole of sector picture on the natural gas supply industry and its potential benefits to all Australians,” he said.

“The paper pulls together both the export market and the domestic market. It looks at all existing and potential uses for gas. It considers the degree of variation in regional gas markets domestically. Thus it gives a comprehensive view of issues related to gas supply development in Australia.

“It is also a ‘first’ in that it is a document that bridges the interests of the gas producers and many of the interests of the gas transmission sector.”

“Put differences aside”

“Our members are deeply concerned that the potential for a horribly fragmented approach by our political parties will prevent Australians reaping the maximum benefits from the nation’s abundant natural gas resources,” Mr Jones said.

Level 3 24 Marcus Clarke Street CANBERRA ACT 2600 - GPO Box 2201 CANBERRA ACT 2601 Tel: (02) 6247 0960 Fax: (02) 6247 0548 Email: appea@appea.com.au

Level 1 190 St Georges’ Terrace PERTH WA 6000 - PO Box 7039 Cloisters Square PERTH WA 6850 Tel: (08) 9321 9775 Fax: (08) 9321 9778 Email: perth@appea.com.au

www.appea.com.au ABN 44 000 292 713

Speaking from Perth at the NatGas launch, Mr Jones said: “Such a disjointed policy approach can only lead to the serious undermining of investors' confidence and threaten the potential lucrative benefits that can flow to the nation and its people from natural gas development.

“It’s time for all political parties and all jurisdictions to return to the bipartisan approach of recent years.”

Pot of Gold

Mr Jones said “The core question asked by NatGas is ‘how much wealth does the nation want to receive from gas development?’

“Potentially, there is a very large pot of gold out there. If that potential is realised, the contents of that pot of gold will generate more jobs, create new industries, expand markets for service companies and help finance a great deal of Australia’s needs, as the population ages and as education and health systems have to be revitalised.

“Do we, Australia, want that potential pot OR do we just meander along with what we have today?”

“Turn vision into view”

Mr Jones said Australia was currently in the middle of a major national debate on energy policy.

“The Prime Minister, all the Premiers and Chief Ministers and all the Energy and Resources Ministers have, in the past, enunciated a bi-partisan energy policy vision for this country that is very appropriate,” he said.

“That vision recognises the critical role fossil fuels will play in our economy and stresses that the greater use of natural gas is vital. The vision also stresses the need for supply reliability, supply sustainability and price competitiveness.

“The real challenge now is to translate that political vision into a bi-partisan view on strategic goals and policy measures. This needs to be undertaken in a comprehensive manner that covers both domestic and export use of natural gas and which focuses on market driven investment in production and transmission infrastructure. This is what NatGas is all about.”

Level 3 24 Marcus Clarke Street CANBERRA ACT 2600 - GPO Box 2201 CANBERRA ACT 2601 Tel: (02) 6247 0960 Fax: (02) 6247 0548 Email: appea@appea.com.au

Level 1 190 St Georges’ Terrace PERTH WA 6000 - PO Box 7039 Cloisters Square PERTH WA 6850 Tel: (08) 9321 9775 Fax: (08) 9321 9778 Email: perth@appea.com.au

www.appea.com.au ABN 44 000 292 713

“Strategic policy goals”

“To deliver the political vision and to realise the maximum possible economic and social benefits for the nation, four strategic policy goals or choices need to be addressed,” he said.

First, how much value does the nation attach to the public benefits that flow from having a reliable energy supply into the longer term?

Second, how much does the nation value the public benefit that can be gained over time from using fossil fuels in electricity generation and transport fuels in a less carbon intensive manner?

Third, how much value does the nation attach to the public benefits to be gained from developing Australia’s abundant natural gas resource endowment?

Finally, how much value does the nation place on the good supply reputation Australia has established in the gas export market?

“Because of the national benefits that flow from appropriately addressing these issues, the key to delivering the necessary levels of investment in natural gas production and transmission infrastructure is not just a matter of the private sector finding markets for natural gas (although this is a vital component),” Mr Jones said.

“If we want to maximise the national benefit, governments have to remove impediments to the effective operation of the market that add costs to investment and therefore reduce market opportunities.

“But more importantly, they have to recognise that ensuring gas moves to its highest national value uses means they have to develop a fiscal framework that allows private investors to incorporate public benefits into final investment decisions.

“This means having a fiscal regime which recognises the value of these national benefits and which maintains the competitiveness and reputation of our export gas industry.

“We are also encouraged by the constructive reaction APPEA has received from the Commonwealth Resources Minister, The Hon Ian Macfarlane, and from the Western Australian Government to the release of the discussion paper.”

Level 3 24 Marcus Clarke Street CANBERRA ACT 2600 - GPO Box 2201 CANBERRA ACT 2601 Tel: (02) 6247 0960 Fax: (02) 6247 0548 Email: appea@appea.com.au

Level 1 190 St Georges’ Terrace PERTH WA 6000 - PO Box 7039 Cloisters Square PERTH WA 6850 Tel: (08) 9321 9775 Fax: (08) 9321 9778 Email: perth@appea.com.au

www.appea.com.au ABN 44 000 292 713

Mr Jones said he also welcomed the support APPEA had received from all its member companies and from the other industry bodies in developing the NatGas discussion paper.

Leading Australian companies such as BHP Billiton, Woodside Energy, Santos, Origin, Tap Oil and Beach Petroleum are among more than 50 oil and gas developers and explorers on the APPEA membership.

APPEA’s overseas-based members behind the discussion paper include petroleum giants such as Exxon Mobil, Chevron Texaco, BP, Shell, Conoco Phillips and Apache.

Media contacts: -

Barry Jones John Field

Executive Director Field Public Relations

APPEA 08-8234 9555 or 0418 819 527

02-6267 0900 or 0408 005 068